Priorities in the right place
Half of employed American adults say they would tap their savings to cope with a shortfall in income if they lost their job rather than relying on retirement accounts (16 percent) or short term vehicles like credit cards (7 percent) and bank loans (8 percent).
"While no one wants to have to dip into their savings, it's encouraging that many Americans realize savings is a better place to tap to get by than their retirement account or credit cards," says Keith Brannan, vice president of Financial Security Planning for COUNTRY Financial. "With some economists predicting the U.S. unemployment rate could rise to 10 percent, it is more important than ever to have a cushion against lost income. It's important for all of us to review and adjust our financial plans to build a level of emergency savings sufficient to carry us for several months."
Spouses' income helps some get by
Of those who are married, nearly half (47 percent) say they would be able to get by on just their spouse's income if they lost their job. Men (39 percent) are less likely to feel secure in relying on their spouse's income than women (57 percent).
"When developing your financial plan and budget, try to cut your expenses so all of your monthly bills could be covered by one spouse's salary," adds Brannan. "Doing so will help you become more confident in your ability to maintain your financial security should something unexpected occur and free up income to build emergency or long term savings when times are good."
Maintaining financial security under threat of a job loss
Brannan recommends these tips for people looking to protect themselves in a time of high unemployment:
- Live frugally, no matter your employment situation. Most advisors recommend stashing away three to six months of income in an emergency fund.
- If you are in a job you think might be downsized, polish up your job skills. Take a course at a community college or consider an industry designation to make yourself more marketable and keep your resume up to date.
- If you have lost your job, the best advice is to do everything possible to limit expenses. Eat at home, grow a garden, shop with coupons, and take advantage of inexpensive entertainment, like a free concert in the park or attending a AA baseball game instead of a major league game.
- If you are in between jobs, consider ways to boost income, like getting a part-time job. Even a lower-level or temporary job can help cover expenses while you look for permanent work. Having a garage sale or selling old items on the Internet can also put more money into your wallet.
